by PETER DE BENE recently in Port Louis, Mauritius
PORT LOUIS, (CAJ News) – AUTHORITIES in Mauritius say they are confident that by the end of 2021, the country will exit the so-called “grey list” of states ranked as money laundering centres for crime and terror groups.
The list, compiled by the Financial Authorities Task Force (FATF) — a body set up in 1989 by the G7 group of countries — compiles research on banks and how well they comply with laws on tax, illegal movement of money and especially the source of funds held by clients.
Large deposits with no traceable origin are tagged as suspect, possibly coming from crime, corruption, or front companies for groups such as al Qaeda.
Only Iran and North Korea appear on the FATF Black List, but the lesser though still serious “grey” version names some of Africa’s most promising economies including Ghana, Botswana and Uganda. Critics say the system is unfair because it lumps them with perennial bad-boys like Syria, Yemen and Zimbabwe.
Inclusion makes a country difficult for investors who need to go through more arduous levels of scrutiny and due-diligence before signing a deal.
The listing of Mauritius in May 2020 was a surprise given its reputation for democracy and good governance. South Africa is the largest trading partner, but the island has long been one of the region’s most important hubs for air and sea freight, and a route for moving money from Africa to India and the rest of Asia.
It’s also a favourite with investors because of low tax, an efficient public service and laws allowing 100 per cent foreign-ownership of companies, with no need for a local partner.
Mauritius is known for its laid-back style, but there are sensitivities since being placed on the grey list, and stories that might have made a footnote in conversation are now talked about at the beachside bars.
Enter, two Indian-born billionaires, Ashok and Ajay Hinduja who, when in London, show up at parties hosted by ministers and even the royal family. They are richer than the Queen, and Ashok (70) chairs IndusInd International Holdings or IIHL, registered at Ebene near Port Louis, capital of Mauritius.
IIHL held its AGM there on Friday 20 November and directors were voted back onto the board, standard practice where nothing has changed. But it had.
Since the previous AGM in 2019, it was reported that Ajay Hinduja (52) had been convicted of forgery by a Swiss court in a case that took place in a financial institution.
Ajay insists he is innocent, and has mounted an appeal which has yet to be heard. There was no link to Mauritius and the matter might have ended there, except that Ajay stood for re-election, allegedly without telling shareholders in advance about the matter.
On 10 December, 20 days after the AGM, dissenting shareholders filed a letter of complaint with the Registrar of Companies in Port Louis, and to the Financial Services Commission requesting an official investigation into conduct of the AGM. A copy of the letter was also sent to the IIHL head office.
Via their lawyers, the shareholders insist a conviction would bar Ajay from serving on the board of any company. Their concerns, they say, have been ignored by company chairman and uncle to Ajay, Mr Ashok Hinduja.
At the AGM, despite some shareholders voting against Ajay, he was duly elected.
Several members attended via Zoom and there exists at least one recording.
Why would a corporate spat at an AGM close to Christmas — with no other claims of wrongdoing against the company or its directors and no claims at all about money laundering — worry those who want to see Mauritius off the grey list?
Perhaps because the $15bn annual turnover of IndusInd International Holdings is bigger than the island’s entire GDP, and anything to do with a company that size gets noticed.
With the holidays, the Mauritian authorities have yet to respond to the shareholders’ letter and, by the time they do, Ajay might have won his appeal in Switzerland, rendering him innocent.
However, with so much focus on restoring the island’s long-held status as a centre of corporate excellence, companies are likely to face closer scrutiny.
In the past, both Nigeria and Egypt have come off the grey list, and authorities in Port Louis say progress has already been made and they are working with FATF to resolve the matter.
– CAJ News